Foreign income

[rdo cpa]

Taxpayer (US citizen) & spouse (Japanese national with residency card) lived and worked in the US for about 6 months. They moved to Japan and the spouse worked for the same employer in Japan. She has a W-2 for her earnings while living in the US. I understand that Japan has a very high income tax and they will have to file there (he had no income after moving to Japan).

On their US return, will they have to claim the income earned while living and working in Japan?

If yes, will they get credit for the tax paid to Japan on that income?

[snowshine]

Usually, a US citizen or resident pays tax on all worldwide income and claims either a credit for foreign tax paid or an itemized deduction. However, in this instance there is a tax treaty between the two countries.

As a result, some clarification is needed to answer you question. Is TP considered a resident of Japan during time worked there? Where is the long-term abode for the couple? The tax treaty between US/Japan (see article 4) gives some leeway if that is the case. Of course they can always choose to tax everything in the US and claim the credit for Japan taxes paid.